‘Mikoshi’ Management: How Kazuo Inamori Lifted Japan Airlines

When Kazuo Inamori took on the task of leading the turnaround of Japan Airlines Co. in January 2010, he had precisely zero experience in aviation management.

Bloomberg News

Kazuo Inamori speaks at a news conference on May 14.

But like many in the country’s older generations, the veteran entrepreneur knew the company well enough from the outside, if not always fondly, having racked up plenty of time inside JAL’s planes as a passenger, first flying with the carrier in the 1950s.

Q. What was your impression of JAL before you went to work there? Were you a regular client?

A. When you went to the counter, met JAL employees, cabin attendants, everything was just done by the book and there was no heart in the services, no feeling of providing the best hospitality. In some ways, they seemed very arrogant…On the first day I came into the company and talked with managers, I told them that I disliked JAL and hadn’t flown JAL for a while.

Q. How did you approach management in an industry in which you had no experience?

A. I didn’t know anything about the airline industry, but I communicated my philosophy to everyone at the company to share the basic thinking. This has been successful and the company has reemerged.

My style is to have the whole company share a single philosophy, from the top-ranking executives to low-ranking employees, and then manage the company based on that philosophy. I think this can be applied to any industry.

I founded Kyocera Corp. when I was 27 years old. Kyocera now generates about Y1.2 trillion in revenue and more than Y100 billion in operating profit, and it has never made a loss in its 53-year history. Another company I created more than 20 years ago is now KDDI Corp., which is the second biggest telecommunications carrier in Japan. It has had remarkable achievements.

Q. You’re convinced your philosophy can work in any industry, including aviation?

A. There’s one condition.

When I first came to JAL, I told executives that we have to state the management’s philosophy and share that with everyone at the company. I also told them we don’t need many statements. One thing we need to say is that the management’s goal is to pursue the happiness of all employees, both physically and mentally…That was what it all came down to.

It wasn’t for shareholders, and it wasn’t for executives. It was for all the employees working at the company. We put that at the very beginning of our philosophy statement. ‘This is your company, and it’s goal is to make all of you happy.’

To share the idea that the company’s goal is to make all employees happy is a prerequisite, before sharing any other ideas. The whole philosophy wouldn’t work without this prerequisite.

Q. How does your management style compare with Western methods?

A. Many U.S. companies think the management’s goal is to maximize their shareholder value. They hire talented individuals for top management positions by paying them high salaries. If they are successful, they get bonuses. It’s a merit-based system where executives are rewarded based on their achievements. In this system the top management team often uses employees like their tools.

My style is different. All employees have the same mindset as executives, and we run the company together. That’s a completely different style (from U.S. companies). I think this style can be useful at other Japanese companies, as long as they agree with that style and put it into practice in running their businesses.

I think management systems in the U.S. and Europe are more like an autocracy, where companies are run by only a handful of people. My style is to have everyone involved. It’s like a bunch of people carrying a Japanese mikoshi (a portable Shinto shrine). It may not seem sophisticated, but the crowd gradually becomes one. For this to work, they have to be united by one philosophy.

There’s an old saying in Japanese: ‘Issho ko narite bankotsu karu’ – ‘A general’s success is built on the bones of ten thousand soldiers.’ This could be taken to mean that one person at the top becomes really successful, while everyone else working under him becomes exhausted.

Q. At the start of this year, you chose Yoshiharu Ueki to become president and effectively succeed you when you leave JAL early next year. Mr. Ueki has 35 years’ experience as a pilot, but relatively little experience as a manager. What made you choose him?

A. I appointed Mr. Ueki because of his personality: I think he has a wonderful character. A person at the top, of course, has to be experienced and knowledgeable about the business. But at the same time, above all else, I think personality and character are important. And that’s the quality I see in ‘Ueki-kun’ (young Ueki).

I don’t think we need to worry much. He has been learning a lot about how to look all the numbers and how to steer the operations.

What’s more challenging is looking at issues with a broad perspective and making decisions. If he ever finds it difficult to decide, I think he will come and talk to me, even when I’m retired.

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